As egg producers consolidate, problems of just one company can be far-reaching

Chris Waldrop, Director of the Food Policy Institute at the Consumer Federation of America, says the Food and Drug Administration has done a good job handling a massive egg recall, but adds the agency needs more authority to prevent outbreaks. (Aug. 23)

The largest egg recall in U.S. history comes at a point of great consolidation in the egg industry, when a shrinking number of companies produce most of the eggs found on grocery shelves and a defect in one operation can jeopardize a significant segment of the marketplace.

Just 192 large egg companies own about 95 percent of laying hens in this country, down from 2,500 in 1987, according to United Egg Producers, an industry group. Most of those producers are concentrated in five states: Iowa, Ohio, Indiana, Pennsylvania and California.

"I don't think people have any idea when they see all these brand names in the stores that so many are coming from the same place," said Patty Lovera, assistant director of Food and Water Watch, a food safety organization. "It raises the stakes -- if one company is doing something wrong, it affects a lot of food."

That magnified effect is illustrated by the current recall: Just two Iowa producers, Wright County Egg and Hillandale Farms, have been implicated in a nationwide outbreak of Salmonella enteritidis, with the companies recalling 500 million eggs sold under 24 brands. "The size of this thing is kind of amazing," Lovera said.

The complexity of the distribution chain means additional recalls are likely as investigators wade through invoices and try to piece together where the affected eggs have ended up.

"A few large manufacturers send product to wholesalers and distributors who repackage and sell it under other brand names," said Jeff Farrar, the FDA's associate commissioner for food protection, who said it can take days or weeks to figure out where tainted food has been sold. "Wright County Egg would sell large volumes of eggs to their customers, some of whom would package these eggs under different brand names or sell bulk eggs to their customers, who may repackage under different names."

As in the beef and hog industries, the consolidation of the egg business has been driven by economies of scale, said Dan Otto, an economics professor at Iowa State University.

Iowa, with its abundant corn, can supply cheap feed to egg companies. The companies have created massive campuses that include hatcheries, egg-laying facilities and multiple processing plants, where some eggs are broken and pumped as liquid into tanker trucks, while others are packaged whole for the wholesale or retail markets.

As the mega-producers have developed during the past 20 years, they have gone largely unregulated by government agencies responsible for making sure food is safe.

The Food and Drug Administration, which has responsibility for the safety of whole eggs, had never inspected the two Iowa-based facilities at the heart of the massive recall that began 10 days ago. Nor had the U.S. Department of Agriculture or the Iowa Department of Agriculture and Land Stewardship. In the case of Wright County Egg, the company had a history of labor and environmental infractions, including one that stemmed from workers handling manure and dead chickens with bare hands.

"It is shocking that nobody was in these facilities, but it also illustrates that egg-laying facilities have fallen into the crack between the government agencies that are responsible for food safety," said Caroline Smith DeWaal, director of food safety at the Center for Science in the Public Interest, an advocacy group.